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Joel Achenbach

Taxation Without Consternation

Once you realize you have the upper hand, settling up with the IRS is no sweat

By Joel Achenbach
Sunday, April 10, 2005; Page W07

You don't have to file your taxes by April 15. That's a vicious myth.

You don't even have to apply for an extension. I know this because I tend to do my taxes every second or third year. In my experience, the government is patient and many months down the road will send a gentle reminder, saying something like, "A thousand pardons, but we seem to have misplaced your tax return."

(Richard Thompson)

You should remember that, as a taxpayer, you have the upper hand in dealing with the government, because you don't make much money, and the government considers you essentially a rounding error. You are a bug. It's always a good thing to be beneath contempt.

Eventually, however, the government turns disagreeable. It will send letters demanding a tax return and threatening penalties, interest, penalties on the interest and, worst of all, interest on the penalties on the interest. About a year and a half after the return is due, you'll get a letter saying: "We've gone ahead and calculated your return for you, and you owe us the truly laughable amount of $398,092.07. You will soon be visited by a man named Vinnie, known on the street as The Cudgel."

I got a version of that letter, referencing my 2002 return, in the fall of 2004. It got my attention because in fact I didn't owe any money -- the government owed me. But now I had to prove it, and so I got out the boxes of crumpled and faded receipts (after two years many receipts turn blank, believe it or not) -- all the old mortgage statements, the credit card records, the canceled checks -- and began to crunch the numbers. I did to those numbers what the T. rex in "Jurassic Park" did to that fat lawyer. It was a masticatory frenzy. I chomped, chewed, ground, swallowed and regurgitated.

I made piles. There was the pile of Obvious Deductions (home mortgage interest, expenses for freelance stories). There was the pile for Somewhat Questionable Deductions. There was the pile for Deductions That Would Show a Lot of Gall. There was the pile for Deductions That Would Make Me a Racketeer. Some of those potential deductions are so alluring. They're so ripe! God how you want them! You get this urge to just . . . deduct your brains out.

In these moments you learn a lot about yourself. Face it, no one is really watching. You probably won't get audited (I never have -- until now!). It's you and your conscience. You come to these little forks in the road. You think: I could save about a hundred bucks right here, right now, just by deducting this little expense. Or I could be . . . honest.

Honesty is pretty cheap, when you think about it.

Parked amid the piles, I realized I like doing taxes, if for no other reason than that it helps me realize that my family and I are fully trapped in the magnetic field of the consumer culture. If someone out there figures out a new way for humans to spend $200, we will be there to spend it. When you look very closely at your expenses, you discover all the rat holes of daily life, all the ridiculous bills, like summer camp and piano lessons and books for the kids. When I was a kid we didn't need all that fancy stuff -- we knew how to amuse ourselves with ordinary household items, like knives and matches. From now on, I decided, my daughters could entertain themselves doing old-fashioned stuff, like wandering the neighborhood looking for boys who might have cigarettes.

Many hours of labor and a few difficult judgment calls later (can cats, for example, be listed as dependents?), I finished the 2002 taxes and used the tremendous forward momentum to finish 2003 and organize 2004 and then review the frequent-flyer accounts and the life insurance and eventually clean off my desk and become the kind of person who knows how many months are left on the warranties on the washer and dryer.

There's only one problem with getting your finances in order and your files completely organized: You realize you're living as though you have a terminal disease.

This is followed shortly by the more painful realization that you really do have one. It's called life.

No one here gets out alive.

Read Joel Achenbach weekdays at washingtonpost.com/achenblog.

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